By Seth
R. DeLong, Ph.D, COHA Senior Research FellowPresident Hugo Chavez of
Venezuela is pushing full speed ahead with land reform, an issue that has
been one of the most divisive and perennially debated topics in Latin
America. Land reform poses perhaps the greatest challenge yet to Chavez’s
stormy presidency, as it historically has been the Achilles’ heel of
left-of-center regimes. Chavez’s daunting task is twofold: first, he will
have to overcome problems that doomed past attempts at land reform
throughout the region by other reformist governments, notably Jacobo
Arbenz’s 1954 attempts in Guatemala
and Salvador Allende’s 1970 – 1973 attempts in Chile. Second, he must
grapple with the middle class’s opposition to agrarian reform, which it will
continue to oppose more tenaciously than any other aspect of his “Bolivarian
revolution.” So far, he appears to have learned from his predecessors’
mistakes by implementing a host of cautionary institutional measures in
order to avoid them. Although the rightwing wrongly considers land reform to
be a carte blanche attack on private property, the opposition and business
interests, such as the Vestey cattle ranch, do have some legitimate concerns
that need to be addressed.

The Facts Regarding
Chavez’s Land Reform
The Venezuelan leader first articulated his land reform plan, what he calls
“Vuelta al Campo,” (Return to the Countryside) under the Law on Land
and Agricultural Development in November 2001. The goals of this legislation
were as follows: to set limits on the size of landholdings, tax unused
property as an incentive to spur agricultural growth, redistribute unused,
primarily government-owned land to peasant families and cooperatives and,
lastly, expropriate uncultivated and fallow land from large, private estates
for the purpose of redistribution. On the last and most controversial goal,
the landowners would be compensated for their land at market value. The
National Land Institute (INTI) was set up to facilitate achieving these
goals by establishing criteria to determine what land could be redistributed
and the eligibility of those applying for new land deeds. Under Plan Zamora
of 2003, both the INTI and its sister organizations, the National Rural
Development Institute and the Venezuelan Agricultural Organization, have
been tasked to administer agricultural expertise to the new peasant
landowners and to provide markets for their goods. After a slow start, the
Chavez government has redistributed about 2.2 million hectares of state
owned land to more than 130,000 peasant families and cooperatives (1 hectare
= 2.47 acres). So far, although not one acre of private property has been
expropriated by the government, tensions are beginning to mount as Chavez
extends his reform program from government-owned land to the latifundios
(large, privately owned estates of more than 5,000 hectares, roughly 12,350
acres).

Chavez Emulates
Lincoln
In the history of land reform, the most accurate analogy to illustrate what
is transpiring in Venezuela is not Zimbabwe or Cuba – Chavez officials have
repeatedly emphasized that they are not emulating the Cuban model of land
reform – but the U.S.’ own Homestead Act. Signed by President Abraham
Lincoln in 1862, the measure declared that any U.S. or intended citizen of
at least 21 years of age could claim up to 160 acres of government land.
Like Chavez’s Vuelta al Campo, there were many restrictions in the
Act which benefited the recipients by ensuring that the new reform could not
be manipulated by entrenched, moneyed interests. Under Lincoln’s
legislation, the land could not be sold to speculators or used as debt
collateral, and only after five years of “actual settlement and
cultivation,” according to Section 2, could the homesteader submit an
application for a land patent. Similarly, in Chavez’s plan, only after three
years may the peasants obtain legal ownership of the land, and only then
after they have rendered it productive. The Homestead Act was one of the
most progressive and far-reaching government initiatives in U.S. history
insofar as it helped to develop and secure an agrarian-based middle class,
which had an epic impact on the future democratization of the nation. That
Chavez is trying to emulate it in his own country, as part of his plan to
extirpate Venezuela’s entrenched inequality, is an effort that all
right-minded people should applaud.

Upping the Ante
Last month, the president of INTI, Eliecer Otaiza, said that “We hope to
issue 100,000 land grants within the next six months.” This announcement
followed a series of new decrees issued by the government intended to speed
up the reform. However, since where the land will come from for the proposed
grants is not clear, hostility has ignited between ranch owners and
campesinos as the government begins inspecting which private estates it
might appropriate. According to Juan Forero of the New York Times,
even before these latest decrees were passed, “as Mr. Chavez’s government
trains its sights on 6.6 million acres of private holdings, farmers are
increasingly worried that it will recklessly seize private property.” The
government has recently set up an “Intervention Commission” to determine
what lands are productive and were obtained legally. Last January, this
commission began exercising its mandate under the INTI by inspecting the
British-owned Vestey cattle ranch of El Charcote in Cojedes. In two months,
the commission is due to announce its findings pertaining to the ranch’s
proprietorship and productivity.

The Right Throws a
Fit
The prospect of Chavez’s “revolutionary” government supporting hundreds of
thousands of machete-wielding campesinos as they shout “fuera los
ingleses” (out with the English) has provoked a spate of somewhat
hysterical editorials by conservative Caracas and U.S. commentators.
Frequently, much of what is written in the U.S. press on the subject is
simply inaccurate or egregious hyperbole, which eventually gets passed off
as gospel. For example, though the New York Times got it right, the
Christian Science Monitor wrote in an editorial that “The plan
supposedly applies to both private and governmental agricultural holdings,
but so far only private lands are being targeted.” While that statement is
demonstrably false, the Washington Post – ominously reminding its
readers that Chavez is a “disciple of Castro” – noted that the “assault on
private property is merely the latest step in what has been a rapidly
escalating ‘revolution’ by Venezuela's president that is undermining the
foundations of democracy and free enterprise.” Carlos Ball of the CATO
Institute flatly declares in his piece, “Chavez’s Land Grab,” that in the
Bolivarian Republic,
“Private property is history.” Even though, as of today, no privately owned
land has yet been redistributed to the landless poor by the government, the
rightwing and its media lapdogs seem mighty nervous over any possible change
in the status quo of Venezuela’s landed elite. But before dismissing Chavez
as another Castro, it would behoove one to analyze the Venezuelan land
barons and the history of agriculture in the country, at least since the oil
boom, in order to determine just how radical the president’s land reform
plan really is.

A Brief History of
Venezuela’s Spectacular Iniquities
In Venezuela roughly 75 to 80% of the country’s private land is owned by 5%
of all landowners. Regarding agricultural holdings, that figure drops to a
mere 2% of the population owning 60% of the country’s farmland, much of
which is fallow. Because these stark statistics do not help one understand
the extraordinary levels of both rural and urban inequality in Venezuela,
perhaps the following analogy will. Imagine if in the U.S. a handful of
families owned the entire state of California. There is no California
Coastal Commission, no limits on the amount of land that may be purchased,
no zoning laws, no government oversight of any kind, nothing of the sort.
But none of this really matters to the average citizen because California,
as a conglomeration of large, privately owned estates, will never be seen by
most U.S. residents (excepting itinerant laborers). In other words, try to
think of one of the most beautiful states in the U.S. as a giant gated
community. Meanwhile, the country’s landed oligarchy owns the vast majority
of the land, most of which lies fallow because they prefer to sit on it for
the purpose of land speculation rather than use it for agricultural
production. With most of its arable land unused, the U.S. is the only net
importer of food on the continent and is forced to purchase more than
two-thirds of its foodstuffs abroad. Though this analogy may help one to
empathize with the land situation in Venezuela, it is still woefully
inadequate for conveying an adequate grasp on the levels of inequality in
that country, as California only makes up 4% of the U.S. land mass.

Venezuela and the
“Dutch Disease”
Today, about 90% of Venezuela’s 25 million people live in urban areas. This
gross imbalance between urban and rural populations is largely a result of
the 1970s oil boom. Before that, about two-thirds of Venezuelans lived in
rural areas. However, once the country became flush with petrodollars, a
succession of middle-of-the-road governments began to neglect the
countryside and focus its resources in the petro industry. This
concentration led to a demographic surge from rural to urban areas as
peasants left their traditional vocation for the lure of urban jobs. The
dire consequence of this internal migration was to turn the country into a
net food importer, the only one in South America. With campesinos
fleeing from the country to the cities, Venezuela’s planners failed to
provide for the labor required to build or even sustain its pre-1970s
agricultural base.

The oil revenues were
allocated largely towards urban infrastructural projects, almost all of
which went towards middle class neighborhoods and white collar pursuits, at
the expense of shoring up the country’s agricultural sector and domestic
manufacturing. The result was a convulsed economy and a shrinking
agricultural base. Accordingly, it was no wonder that the Venezuelan
co-founder of OPEC, Juan Pablo Alfonso, said in 1975: “I call petroleum the
devil’s excrement. It brings trouble . . . Look at this locura—waste,
corruption, consumption, our public services falling apart. And debt, debt
we shall have for years.” This problem of the “Dutch Disease” – the
phenomenon of an economy slumping as a direct result of a rapid spike in one
of its sectors while the others remain constant – has plagued Venezuela for
decades. According to some analysts, even the country’s culture suffered as
a result of the boom. Gregory Wilpert, a freelance journalist and political
scientist based in Caracas, has written that the problem with “Venezuela’s
reliance on oil is that it has fostered a rentier and clientelistic
mentality among Venezuelans. The consequence was that rather than engaging
in creative entrepreneurial activity, Venezuelans were encouraged to ally
themselves with the state, seeking either employment or contracts from the
state, which had a monopoly on Venezuela’s oil income.”

In short, since the
Punto Fijo pact of 1958, the successive governments under the two dominant
middle-class parties, the Christian Democrats (COPEI) and Democratic Action
(AD), made the same mistake as many Middle East regimes: they poured oil
revenues into a privileged elite when they should have been spread out to
most Venezuelans. This mismanagement of resources thereby created a nation
divided between those who benefited from the oil revenues squarely pitted
against those who ultimately suffered from them. By facilitating what the
government hopes will be a long-term demographic movement back to rural
areas, Chavez intends to strengthen precisely those sectors of the economy
and culture that suffered the most from the oil boom. His land reform
program should thus be viewed in the broader context of his “Bolivarian
Revolution,” which can be described as an attempt to reverse much of the
damage the country suffered by the problems of its mismanaged oil wealth,
coupled with the clientelism, profligacy and corruption of the leprous
series of COPEI/AD governments.

Why Chavez’s Land
Reform just Might Work
Chavez has been criticized for returning to a dead end social program,
characterized more by socialist babble than by clear thinking and sound
planning. Critics point out that land reform already has been tried in
Venezuela and failed. Some argue that Chavez’s plan could make for the same
kind of agricultural disaster wrought by President Robert Mugabe’s land
reform policy in Zimbabwe. Regarding this context of botched agrarian reform
attempts, the Christian Science Monitor notes that, “In the 1960s and
‘70s, much of Latin America (including Venezuela) tried such land reform and
failed . . . Government control of agriculture is on the way out globally.”

While it is true that
during the 1960s land was distributed to 150,000 peasant families, there are
fundamental differences between Chavez’s current plan and those that have
failed in the past – differences that indicate the “Fifth Republic” under
Chavez has learned from past mistakes. In a paper prepared for the 2002
World Bank Latin American Land Policy Workshop in Pachuca, Mexico, one key
reason identified for the botched attempts of previous agrarian reform
campaigns was the state’s failure to implement “programs to promote
efficient use of land by beneficiaries.” According to the report, reform
efforts fail “where access to land is not accompanied by a set of
institutional reforms able to secure the competitiveness of beneficiaries.”
In other words, the approach of most governments towards agrarian reform
was, “here’s a plot of land. Good luck.” Chavez has already taken steps to
ensure this mistake is not repeated.

First, his government
is taking a much more activist roll in the reform process than previous
attempts at land reform. Under Vuelta al Campo, the government does
not just distribute land and then walk away. Unlike past attempts, the
government maintains a legal and market-oriented purview over the land
reform process. This includes de facto government ownership of the
distributed land, dissemination of knowledge about proper farming techniques
to the new peasant cooperatives and, most importantly, the creation of
internal and external markets required to absorb the new products. The
intention behind de facto government ownership, in which public authorities
basically hold the deeds to the distributed land in an escrow account, is to
ensure that the new peasant families will not sell their farms back to the
big landowners. That is precisely what happened in the 60s when many of the
peasants re-sold their newly distributed land to the latifundistas
due to a lack of government assistance and a sufficiently clarified market
for their produce, which promptly resulted in a reversion to the status quo.

Furthermore, the
previous land reform in Venezuela never got to the core of the problem,
which was the retention of large, unused but arable tracts of land by the
latifundistas. Under that system, land was left idle for the purpose of
“engordar el toreno,” (to fatten the cow), defined as not using the
land for any agricultural purposes but keeping it fallow while engaging in
land speculation. In an interview with COHA, Professor and Venezuelan expert
Miguel Tinker-Salas of Pomona College said this is the bankrupt agricultural
system that Chavez is seeking to reform: “The attempt at land reform under
the COPEI/AD government was never an effort to break up the large, landed
estates. It was basically a patronage system. It left the fundamental power
structure in tact, which is what Chavez is trying to change.” He argues that
unlike the “superficial efforts at land reform in the past, in which the
government provided little support,” Chavez is earnest about changing the
status quo, and that we “should view his land reform program in the broader
context of the overall social transformation taking place in Venezuelan
society.”

The Right does have
a Point
In fairness, it certainly looks like the government is on the cusp of
expropriating some private lands, though it would only do so if the INTI
determines such land to be fallow or unlawfully gained. The government’s
intervention in the 32,000 acre El Charcote cattle ranch, owned by the
Vestey Group of Britain, raises legitimate questions regarding how far
Chavez’s land reform will go and whether it is prepared to risk scaring away
foreign investors. That prospect poses a serious problem to the regime since
a precipitous flight of foreign capital over fears of “another Castro” is
the last thing Chavez’s social movement needs. As Jose de Cordoba of the
Wall Street Journal reported, “Fear of confiscations is drying up
agricultural investment and financing, and a continuation of this trend
almost certainly would erode production in the not-too-distant future.” In
the wake of Chavez’s repeated calls for a war against the latifundios,
squatters have appropriated much of the Vestey ranch’s land. While they
undoubtedly have suffered historical wrongs, the sight of campesinos
pouring over the vested estates is almost guaranteed to send investors
scurrying.

Just imagine the CEO
of a firm specializing in agricultural exports reading in the New York
Times that, according to Anthony Richards, the manager of the El
Charcote ranch, “the presence of the squatters has forced the farm to cut
the size of its herd to a little more than 6,000 from 13,500 in 1999.
Instead of producing 3.3 million pounds of meat a year, the farm now
produces about a third of that amount.” If Chavez gives into all the
squatters’ demands, many of whom may in fact be occupying land that is both
lawfully owned and productive, his Vuelta al Campo could become
another sad example of the revolution eating its children. Why he is eyeing
some estates which, like the Vestey ranch, appear productive and beneficial
to Venezuelans (the combined Vestey cattle ranches produce around 5% of the
country’s beef), rather than focusing all attention on shoring up the
productivity of government land that has already been distributed – at least
as a first stage – is a perfectly legitimate question to pose to Chavistas.

Nice Job so far – but be Careful
Chavez is right to enact sweeping land reform, both as a means of reducing
Venezuela’s feudal levels of inequality and as a way of boosting
agricultural output, which now accounts for a pathetic 6% of the country’s
GDP. And the right is certainly wrong to offer up only its usual, knee-jerk
reaction to anything Chavez promotes. That noted, Chavez would be well
advised to consolidate the gains already made by the newly landed peasants
on public lands. By making certain that those who have been deeded public
land live up to their end of the bargain – as was the main obligation of
Lincoln’s Homesteaders – Chavez can establish his program as a rare success
story in a region littered with failed attempts at agrarian reform.

This analysis was authored by COHA Senior Research Fellow, Seth R.
DeLong, Ph.D.
February 25, 2005

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